BERLIN (Reuters) - The German economy started the third quarter on a weaker footing, the Finance Ministry said on Friday, putting the blame on a cooling global economy and uncertainties linked to Brexit and trade conflicts that are hurting exports.
The ministry also said in its monthly report that the domestic economy was weakening and the Federal Labour Office was seeing signs of a future rise in unemployment.
"The domestic economy is signalling slower activity," the ministry said in its report. "Demand for new staff continues to weaken."
It added that the services sector was still giving impetus to the labour market, whose resilience has been sustaining a consumption-driven cycle driven by the European Central Bank's expansionary monetary policy.
"In the coming months the prospects for developments in unemployment have deteriorated," the ministry said, referring to an assessment by the Labour Office research arm.
"On the other hand the employment trend remains robust albeit at a slower pace."
Germany's gross domestic product contracted by 0.1% quarter-on-quarter in the second quarter due to weaker exports, with the decrease in foreign sales driven mainly by Britain and below-average demand from China.
German economic institutes expect Europe's largest economy to fall into recession in the third quarter with a similar contraction to the one seen in the April-June period.
The government has resisted calls to take on new debt to finance a stimulus package, saying it would stick to its balanced budget policy.